In The Debrief, our Practice Leaders across CEE share updates on recent and upcoming legislation, consider the impact of recent court decisions, showcase landmark projects, and keep our readers apprised of the latest developments impacting their respective practice areas.
This House – Reached an Accord
Drakopoulos Senior Associate Sophia Angelakou reports that Greece introduced in September a digital transaction duty – “a tax designed to be predictable and transparent.” This will be imposed on agreements and transactions concluded or executed as of December 1, 2024.
Specifically, Angelakou notes that, “by virtue of Law 5135/2024, published in the Government Gazette on September 16, 2024, the stamp duty code which has been in force since 1931 is abolished and replaced by the digital transaction duty.” The law, according to her, restrictively defines the “agreements and transactions on which the digital transaction duty is imposed,” and “the concept of territoriality provided under the previous regime is now abolished as the digital transaction duty is imposed on transactions where at least one of the parties involved is a Greek tax resident or has a permanent establishment in Greece, regardless of the place of conclusion and execution of the transaction.”
Indicatively, Angelakou notes, “the transactions on which the digital transaction duty is imposed include the transfer of a business, provided that it is not subject to VAT and that it is not part of a business restructuring and loan agreements where a cap of EUR 150,000 per loan agreement applies. On the contrary, the digital transaction duty is not imposed on bond loans, bank loans, and fees payable by way of profit distribution to Members of the Board of Directors of a Societe Anonyme or to directors of a Limited Liability Company and a Private Company.”
Debarliev Dameski & Kelesoska Partner Jasmina Ilieva Jovanovik highlights legislative updates on competition in North Macedonia. “On October 2, 2024, the Macedonian Assembly adopted a law to amend and supplement the Law on Protection of the Competition, published in the Official Gazette of RNM no. 208/2024 on October 9, 2024. The main change provided with this law is expanding the number of members of the commission from two to four.” Additionally, “the criteria for electing the president and members have also been updated as well as the legal grounds for their dismissal.” Within three days of the entrance of the law into force, Ilieva Jovanovik notes, “a public call for the election of a new president and four members of the commission will be announced and, with the selection of the new members and the new President, the mandate of the present ones shall cease.”
Ilieva Jovanovik also stresses that some changes “seem unclear and may cause doubts about whether the special infringement commission will be still composed of the President and two commissioners, as has been the case so far. The changes in the structure and the capacities of the commission are provoked by the law on unfair trade practices in the agricultural and food products supply chain whose enforcement is dedicated to the commission, so by expanding the duties of the commission in supervising the new unfair trade practices regulation, the enhancement of [the special infringement commission] was expected as well.”
This House – The Latest Draft
Asters Associate Oleksii Sapura draws attention to Ukraine’s improved regulations on industrial parks. “Over the past three years, the number of registered industrial parks in Ukraine has doubled,” he notes, as “on October 1, 2024, there were 91 of them with a total area of over 3,000 hectares. This increase was caused by the relocation of enterprises to safer western regions of Ukraine and anticipation of the country’s rebuilding.” Given the positive dynamics, Sapura says, on “October 14, 2024, Draft Law No. 12117 was registered in the parliament, which proposes key improvements in the regulation of industrial parks in Ukraine.” Namely, Sapura highlights the “transformation of industrial parks into eco-industrial parks to contribute to the decarbonization of Ukraine in line with the European Green Deal and increase competitiveness in light of CBAM regulations,” adding “it is expected that eco-industrial parks will operate in parallel with industrial parks, hence state support can be prioritized for eco-industrial parks.” Sapura also stresses, that “activities and objects eligible for industrial parks, including energy production and/or storage and the accommodation of offices, restaurants, hotels, hostels, and dormitories within the area of industrial parks,” will be extended and “the procedures for the establishment and registration of industrial parks” will be streamlined. Finally, Sapura notes that “financial incentives will be supplemented with simplified regulations to boost the further development of industrial parks and Ukraine’s rebuilding for a green and sustainable future.”
As for Romania, Albota Law Firm Partner Oana Albota highlights a new legislative bill that proposes a 10% cap on down payments for the acquisition of apartments from developers. “The Social Democratic Party has introduced a legislative bill, submitted to the senate on October 9, 2024, aimed at closing a regulatory gap in residential real estate transactions by amending Law No. 10/1995 on construction quality,” she reports. The purpose of the bill, according to Albota, is related to “recent concerns about market practices, where real-estate residential developers often require significant down payments upon signing sale and purchase pre-agreements, frequently without providing adequate financial guarantees.” She says that “if developers fail to deliver the property on time or, in worse cases, the bankruptcy of developers is declared, promissory purchasers become vulnerable and exposed to potential financial losses.” To address this, Albota highlights that “the bill sets a 10% limit on down payments developers can require from promissory purchasers, unless they obtain insurance from a licensed insurance company to protect the promissory purchaser if the developer fails to meet its obligations, in which case the down-payment can increase up to 40%.” Additionally, there will be “special purpose bank accounts for down payments,” and “the use of down payments only for developing the residential project.”
While the bill seeks to curb fraudulent practices, Albota draws attention to pitfalls. The bill “does not tackle broader structural issues such as a lack of comprehensive oversight in the residential real estate sector, inefficient dispute resolution mechanisms, or systemic delays in project delivery,” she points out. This cap could also “limit flexibility, especially for small- and medium-sized developers who are largely dependent on down payments for funding.”
The Verdict
Walless Associate Partner Guoda Sileikyte highlights the recent court decision on the right to be forgotten in Lithuania in the context of privacy and journalism: “on October 4, 2024, the Supreme Administrative Court of Lithuania examined a case in which the petitioner sought the removal of his personal data from Google under the GDPR’s ‘right to be forgotten.’ The inspectorate, empowered to assess complaints regarding personal data processing in journalism-related matters, dismissed the complaint, asserting that Google’s data processing aligned with freedom of expression and journalistic purposes, which, under the GDPR, includes a broad interpretation that allows society to access information about individuals tied to public interest concerns, especially those with a criminal past.” Sileikyte emphasizes that “the first-instance court partially supported the petitioner’s demands, but the court, referencing decisions from the Court of Justice of the European Union, concluded that the lower court had incorrectly applied GDPR provisions. Consequently, the court remanded the case for further examination. This ruling clarifies the extent to which data processing for journalistic purposes may align with public interest under the GDPR.”
In the Works
In September, the energy sector in Bulgaria according to CMS Sofia Managing Partner Kostadin Sirleshtov, “was quite vibrant as Rezolv Energy secured EUR 90 million in debt financing from IFC and Raiffeisen to support the construction of the St. George 229-megawatt solar park in Bulgaria. This follows the signing in early September of a 12-year Virtual Power Purchase Agreement with Ardagh Glass Packaging-Europe.” The agreement is intended “to provide 110 gigawatt-hours per year of renewable electricity from St George to AGP-Europe to help decarbonize its manufacturing operations across Europe.”
Furthermore, Sirleshtov says, “Toshiba will assist Bulgaria in restoring the operation of the Chaira pumped-storage hydropower plant Chaira PSHPP. The National Electricity Company EAD will announce a public tender for the repair of Chaira Hydro Unit 1, which is necessary in view of its key importance for the country’s energy system and its significance for ensuring electricity security.” In the longer term, he says, “a public tender is to be issued for the procurement and replacement of generators, turbines, main and auxiliary equipment, and control systems, testing and commissioning of Chaira Hydro units 1 and 4.”
JPM & Partners Senior Partner Jelena Gazivoda emphasizes that the Serbian energy market has seen significant changes recently. “From a business-project perspective, one of the most high-profile projects is the construction of self-sustaining solar power plants with integrated battery storage systems. The strategic partnership between the Republic of Serbia, Hyundai Engineering (South Korea), and UGT Renewables (United States) stands out as one of the largest initiatives of its kind in Europe.” The project, according to Gazivoda, involves building solar plants with a total installed capacity of 1 gigawatt and battery storage with an installed capacity of 200 megawatts. “The project is set for completion by mid-2028, with financing efforts currently underway, likely to attract attention from leading global investors,” she notes.
Forgo, Damjanovic & Partners Managing Partner Zoltan Forgo highlights the M&A activities of the Hungarian state. First, he draws attention to the sale of majority interests in the Hungarian Post Insurance Companies. “As previously reported, the state-owned Corvinus Nemzetkozi Befektetesi acquired a 66.9% share of the Hungarian Post Insurance Companies from the German Talanx Group in April 2023.” Forgo states that “although, the Hungarian State asserted that it intends to invest in the insurance sector as a strategic sector for the state, and even merger control was not needed due to the strategic importance of the acquisition, soon after the completion of a public tender for the sale of the acquired shares was issued in September 2023. In July 2024 it was announced that Granit Biztosito, a company linked to Mr. Orban’s son-in-law won the tender.” He notes that “the request for merger control clearance was submitted to the Hungarian Competition Authority for approval in September 2024. Once the approval is granted, the transaction could close this year, meaning that the Hungarian State will have successfully sold its shares, merely a year after their acquisition.”
Additionally, Forgo reports on the “aborted acquisition of Spanish Talgo by a consortium involving the Hungarian state. The Ganz-MaVag Europe consortium, in which the Hungarian state indirectly holds a minority share through Corvinus Nemzetkozi Befektetesi, has submitted a formal offer to buy the Spanish train manufacturer in March 2024. Eventually, the Spanish government vetoed the transaction for strategic interests and national security at the end of August 2024.” He points out that “though, the Spanish government classified the documents supporting its decisions, according to the Spanish newspapers the reason behind the veto was the alleged relationship of the Hungarian government (and the MOL Group, which is connected to the majority owner) to Russia (or even the Russian government). Ganz-MaVag announced that it will file a lawsuit for violating EU law as the Spanish government has prevented the free movement of capital, which is a fundamental right of the European Union.”
Done Deals
Last month saw “a growing number of large M&A transactions in the telecommunications, real estate, and banking sectors” in Ukraine, according to Avellum Managing Partner Mykola Stetsenko. Among others, Stetsenko says that “a large French telecom group NJJ invested in the acquisition of Lifecell, the third largest telecom operator in Ukraine. The transaction also envisaged a combination of Datagroup and Lifecell into one group. Horizon Capital played a major role in securing this deal, while EBRD and IFC provided USD 435 million in financing for this transaction.”
Another major transaction was “the acquisition of Idea Bank by TAS Group – the first banking M&A in Ukraine, since 2022. FinPoint and Rothschild & Co Warsaw led the deal.” Finally, Stetsenko highlights that “Dragon Capital acquired from DCH Investment Management the Karavan Outlet opened in 2003 and renovated in 2019. It was the first shopping mall established in Kyiv and is currently the largest outlet shopping mall in the capital. The overall size of Karavan equates to 57,321 square meters, with 42,788 square meters of rental areas.”
Regulators Weigh In
Gazivoda notes that “the Serbian Ministry of Mining and Energy has initiated public consultations on proposed regulations for market premiums and feed-in tariffs, as well as quotas for wind and solar power in the market premium system. The proposed quota for wind farms is 300 megawatts and 124.8 megawatts for solar power plants. Notably, this legislative package introduces a new auction criterion: in addition to the electricity production price, the supply capacity for end customers in Serbia will also be evaluated. It has been indicated that further auctions could be held in the last quarter of 2024, pending the Serbian government’s decision on maximum auction prices for wind and solar electricity production.”
The recent works of the Romanian Competition Council (RCC), Nestor Nestor Diculescu Kingston Petersen Partner Anca Diaconu notes, “come to once again prove its reputation of a very active authority, signaling its commitment to enforcement by way of the various tools it has available.” One of the most notable updates in terms of the “RCC’s activity is the ongoing public consultation process concerning commitments proposed by Delhaize Nederland B.V. in the context of the envisaged acquisition of Profi Rom Food,” Diaconu says. “This is Romania’s largest retail transaction to date, and the significant commitments proposed cover a wide range of measures – from structural to behavioral remedies, including divestment of 87 stores across 44 locations and obligations on the buyer to refrain from interfering in these business segments for a substantial 10-year period (as a minimum).”
Another area that has recently started to be under the RCC’s scrutiny, according to Diaconu, “is that of cases of exploitation of superior bargaining position, with two ongoing investigations (in the medical sector and in the auto services sector). These mark the beginning of the RCC enforcement in the exploitation of superior bargaining position cases, showing that enforcement tools under the Unfair Competition Law no. 11/1991 should not be disregarded by the business environment.” Also, “foreign direct investment screening procedures continue to be among the highlights of RCC’s recent activity,” she says. “The authority has recently begun efforts to ensure greater transparency of their practice, publishing an impressive 167 foreign direct investment (FDI) decisions, illustrating the extensive reach of a national screening mechanism.”
Finally, Act Legal WMWP Partner Roman Hager reports that the “European Central Bank (ECB) has become an increasingly active player in the oversight of mergers and acquisitions within the Eurozone’s banking sector. As the central authority under the Single Supervisory Mechanism, the ECB is responsible for ensuring the stability and soundness of significant financial institutions. In recent years, its role in banking M&A transactions has expanded, with the ECB now taking a more hands-on approach in ownership control assessments and regulatory approvals.” One key area where the ECB has increased its focus, according to Hager, “is in assessing the financial health and resources of the acquirer. The regulator now requires detailed disclosures of the buyer’s funding sources and its ability to sustain the target institution post-acquisition. The ECB also evaluates the prospective owner’s business model, management capabilities, and governance structure, with a specific focus on long-term sustainability and adherence to regulatory standards.” As a result, “acquirers and their legal and financial advisors must now be better prepared for the ECB’s intensified scrutiny,” he notes. The impact of this expanded role on individual member states, including Austria, has yet to be seen.
In Broader Related News
Sileikyte also says that Lithuania is emerging as “one of the first European Union members to establish a pioneering AI testing environment, known as the ‘AI Sandbox.’” This initiative, according to her, “will provide technology companies with a secure space to develop, test, and refine AI solutions before their market introduction, fostering innovation and enhancing competitiveness on a global scale. The Lithuanian Government has approved new regulations designating the Innovation Agency and the Communications Regulatory Authority as the primary institutions responsible for AI sector implementation. The Innovation Agency will evaluate organizations aspiring to become notified bodies and offer AI system assessment services throughout the EU, ensuring compliance with the AI Act’s requirements. Meanwhile, the Communications Regulatory Authority will oversee market supervision of AI systems.”
Finally, Doklestic Repic & Gajin Partner Marko Repic highlights that “in October 2024, Serbia granted its first greenhouse gas emission permit to Nikola Tesla Airport in Belgrade under the 2021 Climate Change Law, marking a pivotal development in the enforcement of mandatory monitoring and reporting for the industrial and energy sectors. This permit introduces new climate-related requirements, particularly around carbon neutrality, as Serbia steps up its alignment with international and EU climate regulations.” With the rising relevance of sustainability and regulatory pressures in the energy sector, Repic notes that “these developments will inevitably influence M&A trends, corporate valuations, and even long-term strategy decisions.”
This article was originally published in Issue 11.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
